M/S. U. P. Electric Supply Co., Ltd vs The Workmen Of M/S. S. N....

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 481 of 1958

Decision Date: 8 March 1960

Coram: K.N. Wanchoo, P.B. Gajendragadkar

On 8 March 1960 the Supreme Court of India delivered a judgment in the case of M/s U P Electric Supply Co., Ltd. versus the workmen of M/s S N Choudhary, contractors and another. The bench consisted of Justice K N Wanchoo and Justice P B Gajendragadkar. The petitioner was M/s U P Electric Supply Co., Ltd. and the respondents were the workmen of the contractor named S N Choudhary, together with an additional respondent. The judgment was reported in 1960 AIR 818 and 1960 SCR (3) 189. The matter involved the U P Industrial Dispute Act, 1947, specifically sections 34 (Proviso) 5 and 8, which relate to the jurisdiction of industrial tribunals when an issue has not been referred to them. The case was styled as a civil appeal, numbered 481 of 1958, filed by special leave against an award dated 29 June 1957 of the State Industrial Tribunal, Allahabad, reference No 98 of 1956.

The factual background recorded that the appellant company employed Messrs S M Choudhary as contractors to perform certain works, and those contractors in turn hired workmen to carry out the contracted tasks. In 1956 a dispute arose between the contractors and their workmen, prompting the workmen to file an application before the conciliation board on 6 June 1956. Both the company and the contractors were made parties to that application, and the workmen raised four specific grievances: the non‑grant of bonus for the years 1953‑54 and 1954‑55, the non‑grant of festival holidays, the non‑fixation of minimum wages on par with those paid to the company’s own workmen, and the non‑abolition of the contract system. Conciliation failed, and the Government referred the dispute to the Industrial Tribunal under the U P Industrial Disputes Act, but only three of the four issues were transmitted; the question of abolishing the contract system was omitted. The reference was limited to the contractors and their workmen, and the appellant company was initially excluded. Later the Government issued a notification that impleaded the company as a party, yet it did not amend the original referral to include the fourth grievance concerning the contract system. The Tribunal framed several issues, the principal one being whether the workmen were employees of the appellant company or of the contractors. After examination the Tribunal concluded that the workmen were in fact employees of the company. On appeal, the Supreme Court held that the Tribunal lacked jurisdiction to determine the employee‑status question because that specific issue had not been referred to it. The appeal was argued by counsel including M C Setalvad, Attorney‑General for India, and others for the appellant, while the respondents were represented by separate counsel.

The Court noted that this appeal by special leave challenged the order of the Industrial Tribunal in Allahabad. The appellant, U. P. Electric Supply Co. Ltd., Lucknow, was referred to as “the company.” The record showed that the company had engaged Messrs S M Chaudhary, hereinafter called the contractors, to perform certain work on its behalf. The contractors, in turn, hired a number of persons to execute the contracted tasks. In 1956 a dispute emerged between the contractors and those workmen, and on 6 June 1956 the workmen filed an application before the conciliation board. Both the company and the contractors were made parties to that application, and the workmen presented four matters for consideration: (i) the non‑grant of bonus for the years 1953‑54 and 1954‑55; (ii) the non‑grant of festival holidays; (iii) the failure to fix minimum wages for these workmen at the same level as the workmen employed directly by the company; and (iv) the non‑abolition of the contract system. Conciliation efforts failed, and consequently the Government of Uttar Pradesh referred the dispute to the Industrial Tribunal under the U. P. Industrial Disputes Act, No. XXVIII of 1947 (the Act). The reference to the Tribunal included only three of the four issues originally raised before the conciliation board, namely the bonus, festival holidays and wage parity matters; the issue concerning the non‑abolition of the contract system was omitted. The parties to this reference were limited to the contractors and their workmen; the company was not a party at that stage. On 13 August 1956 the Uttar Pradesh Government issued another notification, invoking sections 3, 5 and 8 of the Act, thereby impleading the company as a party to the dispute identified in the earlier notification dated 31 July 1956. Notably, the matters of dispute listed in the July 31 notification were not altered, although the proviso to section 4 of the Act permitted addition of the omitted fourth point concerning the contract system. When the matter proceeded before the industrial court, a series of issues were framed, the foremost being: “Are the workmen concerned employees of U. P. Electric Supply Co. Ltd., Lucknow, or of Messrs S M Chaudhary, contractors?” The company’s principal objection was that any dispute, if it existed, lay solely between the contractors and their employees, and that no dispute existed between the company and the workmen. The company further contended that there was no valid governmental order referring any company‑workmen dispute to the Tribunal, and therefore the Tribunal lacked jurisdiction.

The company contended that there was no valid governmental order referring any dispute between it and its workmen to the tribunal, and consequently the tribunal lacked jurisdiction. On the substantive side, the company argued that the workmen in question were not its employees and that no employer‑employee relationship existed between the company and those workmen; therefore the company could not be treated as a party to a dispute that was essentially between the contractors and their workmen. It followed that the principal issue before the tribunal was whether the workmen were employees of the company or of the contractors. The tribunal itself described this point as the “crux of the whole case.” After examining the evidence, the tribunal concluded that the workmen were, in fact and in reality, employees of the company. The company’s principal submission before this Court was that, even assuming that the Government possessed power under section 5 read with clause 12 of Government Order No. U‑464 (LL) XXXVI‑B‑257(LL)/1954 dated 14 July 1954 to deem the company a party, the tribunal had been asked to decide only the three matters of dispute enumerated in the reference order of 31 July 1956. The tribunal’s decision on whether the workmen were employed by the company went beyond those three matters and therefore was rendered without jurisdiction. This Court was of the view that the company’s contention must therefore prevail.

The record showed that four matters had been before the conciliation board, one of which was the question of non‑abolition of the contract system. Both the contractors and the company had been parties before the conciliation board because the issue of non‑abolition necessarily required the company’s participation. However, when the Government referred the dispute to the tribunal on 31 July 1956, it omitted the fourth item concerning the contract system and did not list the company as a party; the reference order identified only the contractors and their workmen as the disputing parties. Consequently, the tribunal could not lawfully decide the question of whether the workmen were the company’s employees, as that question had not been referred to it. It was true that on 13 August 1956 the company was impleaded as a party to the dispute referred by the 31 July notification, but the matters in dispute were not amended, and the issue of non‑abolition of the contract system or the question of the workmen’s employment status was not added under the proviso to section 4 of the Act. Hence, the jurisdictional defect remained, rendering the tribunal’s order that the workmen were the company’s employees beyond its authority.

In this case the Court observed that the question of whether the workmen were, in fact and in reality, employees of the company had not been placed within the matters of dispute by any amendment made under the proviso to section 4 of the Act. Consequently the Court held that it was irrelevant to examine whether the company’s impleading as a party on August 13, 1956, was lawful or valid. Even if the impleading were deemed lawful, the Court emphasized that the first issue identified by the Court, which formed the core of the controversy, had never been referred to the tribunal and did not arise from any of the three matters of dispute enumerated in the reference order dated July 31, 1956. Because of this omission, the tribunal’s order declaring that the workmen were the workmen of the company was beyond the tribunal’s jurisdiction. The Court therefore concluded that the entire tribunal order, which was directed against the company, must be set aside in its entirety as a jurisdictional mistake, and that no assessment of the merits was necessary. Accordingly the appeal was allowed and the tribunal’s order against the appellant was vacated. The Court further stated that no order as to costs would be made in the circumstances. The appeal was thereby allowed.